Growth plan for Dewu (Doudu) trendy e-commerce platform

When doing data analysis, we must constantly strengthen our ability to conduct growth analysis. By studying the growth strategies of outstanding companies in the industry and analyzing what they do well and what they do not do well, you can gradually become the person who understands the business best in data analysis and the person who understands data best in the business. The author of this article studied the rapid growth of " Douwu " and sorted out how the growth plan was implemented. Let’s take a look.

1. Growth Research Framework

Growth research, or any study, should be systematic . If it is only partial, the conclusions drawn are likely to be completely contrary to the original intention.

Let’s first look at the framework of the growth algorithm.

Friends who are familiar with the book "Growth Hacker" will be impressed by this sentence:

Whether a startup can achieve growth depends first on whether its product has the feasibility of growth.

Are we currently in an incremental market? How big will the user base be? What is the frequency of user consumption? How high can the price be set?

It can be said that the product determines the number of users, average order value, and repurchase coefficient from the very beginning.

Therefore, the first step should be to study the feasibility of product growth.

The second step is to achieve user growth and allow more users to access the product.

As the dividends disappear, the cost of acquiring customers becomes increasingly higher. Whether customers can stay and achieve the third step of retention and repeat purchases is the key to revenue growth.

The upper limit of revenue growth is whether the company can rely on its own products, culture, and influence to proceed to the fourth step and achieve self-growth through fission.

If each of the above four steps can be done well, the revenue growth flywheel will start to turn rapidly.

2. Product Growth Feasibility

I used to think that Dewu was just a trading platform for reselling sneakers , and its users were all rough men.

What I didn’t expect was that there were all kinds of trendy products including trendy clothes, bags, cosmetics, Pop Mart, etc.

In fact, in 2019 (the year when "shoe speculation" was the hottest), they began to layout the fashion market. Through analysis, it was concluded that in 2019, the transaction volume of commodities other than sneakers increased.

Because trendy young people are not only interested in sneakers, but also in clothing, bags, jewelry, and action figures.

Data shows that the size of the trendy clothing market increased by 224% from 2018 to 2019, and the size of the consumer population increased by 126% year-on-year.

What is even more surprising is that from 2018 to 2019, the GMV of the Z-generation fashion market increased by 443% year-on-year, and the size of the consumer population increased by 267% year-on-year, which is twice the growth rate of the entire fashion market.

It is very necessary to talk about Generation Z here. They were mainly born between 1998 and 2004. They have a total population of 280 million, accounting for 18.1% of the country's total population, and one-third of them are already adults.

Moreover, the average monthly disposable income of Generation Z has exceeded that of urban residents, reaching around 3,500.

Dewu has developed from sneaker trading to the entire fast-growing fashion market, and Generation Z will also be the main force in the future, giving the product more room for growth.

3. Determine the direction of growth

To research a company and find out what it does specifically, you can start by looking at the type of people they recruit.

Here we have captured 500 recruitment data on LinkedIn (which summarizes Boss, Lagou, Liepin, etc. ).

Based on job titles and responsibilities, we can infer their organizational structure . When we study growth, we mainly start with operations and promotion.

From the promotion aspect, it can be seen that it is mainly application store ASO optimization and advertising. In addition, after a more detailed study of job responsibilities, short video effect advertising is the top priority for acquiring customers.

In terms of active user conversion, it is mainly carried out from the perspectives of merchant operation, category operation, user operation and community operation.

In terms of user fission, fission is brought about through gamification operations.

Let’s take a closer look at it below.

4. Advertising Analysis

Through a well-known data advertising platform, we obtained 150,000 online advertisements, including the copy, landing pages, delivery platforms and delivery dates.

It was found that Dewu increased its advertising efforts in 2021. As of July 2021, Dewu had placed 104,188 advertisements, while in the whole year of 2020, the number of advertisements placed was only 37,236, a year-on-year increase of 279.8%.

Moreover, the advertisements placed are all aimed at guiding users to download the APP, with the aim of increasing the number of APP users.

Here, by studying the copy of the landing page, we found that the routine they used was mainly "authentic", which also emphasized the professionalism of their appraisers.

In addition to emphasizing authentic products, Dewu’s copywriting also emphasizes discount routines.

Seeing such a heavy investment in 2021, let’s take a look at how efficiently the marketing expenses are used.

Regarding the evaluation of marketing expenses and usage efficiency, we can establish an indicator here, which is the ratio of advertising amount to the number of newly installed active users. It can be concluded that the smaller the ratio, the more newly installed active users are brought in by the same advertising amount.

However, it was found that this ratio has been increasing in 21 years, which means that the marketing efficiency has become relatively worse.

Next, we will see whether there are problems with conversion and retention , resulting in less efficient use of marketing expenses.

5. APP conversion and retention analysis

Performance advertising can bring in a large number of APP users, but it does not mean that these users will place orders.

After users are guided to download the APP through advertisements, a message “ New users can receive a 520 red envelope ” pops up, asking users to complete the corresponding registration information and then proceed to shop.

When used specifically, the discount ratio is very low. For example, if a pair of shoes is priced at 529 yuan, a 15 yuan discount is offered, which means the discount ratio is only 2.8% . This discount has little impact on stimulating purchases.

If we have to blame someone, we can blame the fact that the discounts Pinduoduo offered to new users were really large, which directly increased everyone's awareness of the discounts.

From the perspective of new users, they have just registered and are guided to buy shoes worth more than 500 yuan , but they have not yet fully trusted the platform. If they are guided to buy products with lower average order value and let users experience the shopping process and provide some services, it will help them to repurchase products with higher average order value.

Let’s take a look at the activity and repeat purchases . The key point is to retain users and their time. Everyone says that "Douyin" is a direct competitor to the "Xiaohongshu" community e-commerce platform , so let’s do a comparative study.

Comparing the average daily usage time per person , it was found that Xiaohongshu has increased from 30 minutes in 2020 to 60 minutes , while Dewu has been hovering around 10 minutes since 2020. Now Xiaohongshu is 6 times the average usage time of Dewu.

Comparing the retention of new users , before the 14-day retention rate, the retention rate of the Douyin APP could still reach more than 70% of the retention rate of Xiaohongshu. By the 30-day retention rate, it could only reach 40% of that of Xiaohongshu. The later it gets, the lower the retention rate is compared to Xiaohongshu.

There is still a certain gap between Dewu and Xiaohongshu in terms of average usage time per person and new user retention . A good community atmosphere and active top and mid-level KOL users will play a key role. Top and mid-level active users account for 44%, which will drive more than 55% of the tail users to follow suit and become active.

By comparing the impact of KOLs from "Douwu" and "Xiaohongshu" on community activity, the top KOLs are not much different, and it is found that the likes-to-fans ratio of mid-level KOLs is 1.2:61.8, and the likes-to-review ratio of mid-level KOLs is 13.3:45.3, reflecting that the contribution of mid-level KOLs from Douwu to community activity is relatively poor.

Now "Douyin" needs to cooperate with external MCNs and introduce more external KOLs. KOLs create high-quality content, drive activity, and bring in monetization through grass-planting. However, there needs to be a balance between high-quality content and grass-planting.

When we discussed the organizational structure above, we saw that "Douwu" has a gamification growth position, which is mainly responsible for growth fission and achieves the purpose of fission through a series of activities.

For example, take a look at this 0 Yuan giveaway event. If you invite a classmate, you can draw a gift for 0 Yuan.

The main path is to share the link from the APP to WeChat, and then increase the number of users of the WeChat mini program through fission.

To judge the effect of fission, we use a data indicator here, active penetration rate , which is the ratio of the MAU of the mini program to the MAU of the APP. If there is an upward turning point, it means that the active growth of the mini program is not only brought about by the active growth of the APP, which means that it has a great positive correlation with the fission of the mini program.

Here we verified it through the APP release version and saw the version update record. The "0 Yuan Lottery" was launched in September 2020 and the "0 Yuan Lottery for Top Products" was launched in October 2020.

According to the above chart, it is indeed found that from September to November, the penetration rate increased from 0.16 to 0.2, an increase of 20 percentage points , and the effect has indeed been significantly improved.

Gamification fission does have an effect, but the effect was not very obvious in the following months and still needs to be continuously optimized.

In fact, for the fission, the most important thing is to give the sharer enough motivation to share . It is said that every time you invite one person, he or she can participate in the lottery. However, the lottery has a lot of uncertainty. Many of the people who participate in the invitation or the invited people will think that they are insulated from the lottery. If they don’t get any incentives, they will have no motivation to share again, and the fission will stop.

Suppose that "Douyin" allocates some of the marketing expenses of performance advertising to user fission, such as the following fission strategy: by inviting one person, you can get a coupon worth 50 or 100 yuan, but the coupon obtained by the inviter can only be used if the invited person makes a purchase. This may be more effective in attracting new users and conversions.

VI. Conclusion

This concludes our first growth research, which was mainly conducted around this framework.

Study the feasibility of product growth, clarify user scale, product pricing, and user repurchase coefficient.

After that, we will conduct detailed research on user flow (A), activity (A), conversion (R), retention (R), and dissemination (R) .

From studying the growth strategy of "Douwu", we have seen many problems; for example, although more and more advertisements are being placed, the marketing efficiency has been declining in 2021; in terms of user activity, it is not as good as Xiaohongshu. The "user daily usage time" of Xiaohongshu is 60 minutes, while that of Dewu is more than 10 minutes, a difference of nearly 5 times.

In fact, for "Douyin", the real comprehensive development of the fashion market only started in 2020, and just over a year has passed, which is quite fast.

Taking trendy clothing as an example, there were only more than 100 brands in 2020, but more than 100 brands were added in just two months after the Spring Festival this year, and the expansion of brands is accelerating.

We attach great importance to product operations, with product positions accounting for 69.4% of operation positions, serving to rapidly expand the brand.

A large amount of traffic subsidies are given to KOLs to attract more KOLs to join.

This is the first time we study "Douwu", but it will not be the last. We will work on the AARRR section and do more detailed research to present more detailed content to everyone.